Pound to Dollar Pares Gains Towards 1.30, GBP/EUR Dips to 1.182

April 4, 2025 - Written by Frank Davies

STORY LINK Pound to Dollar Pares Gains Towards 1.30, GBP/EUR Dips to 1.182

Markets have attempted to rally at times, but the underlying mood has been extremely defensive with serious deterioration in risk appetite as President Trump’s imposition of tariffs on all imports to the US continues to undermine confidence.

Despite the US imposing 20% tariffs on EU exports to the US, the Euro has gained significant defensive support.

The Euro to Dollar (EUR/USD) exchange rate is trading around 1.1100 and close to 6-month highs recorded earlier in the session.

According to Scotiabank; “EURUSD is likely to remain well supported and we look to new resistance around 1.12.”

Amid Euro strength and a slide in risk appetite, the Pound to Euro (GBP/EUR) exchange rate has dipped to 3-week lows close to the 1.1850 level.

Equity markets remain heavily in the red and GBP/EUR will struggle unless there is a rebound in risk conditions.

Just after the US open, the S&P 500 index is trading 3.7% lower with the FTSE 100 index registering a loss of 1.7%.


Confidence in US and global markets have been shaken.

GBP/USD hit 6-month highs just above 1.3200 before a retreat to 1.3165.

Capital Economics, for example, have slashed their end-2025 S&P 500 forecast to 5,500 from 7,000 previously.

Aberdeen chief economist Paul Diggle, doubts there will be any US U-turn; “So far, the administration appears far more tolerant of market weakness than in Trump’s first term. Indeed, low bond yields and a weaker dollar may be actively helpful market moves give the administration’s preferences.”

He also warned that there could be further pain ahead; “We still think additional sector specific tariffs are coming, including on semiconductors, copper, lumber and pharmaceuticals.”

Moody’s Analytics senior director for economic research Gaurav Ganguly warned over Euro-Zone vulnerability; “The euro zone economy has recently been displaying signs of recovery, but reciprocal tariffs of 20% on exports to the US will severely damage growth prospects this year and next.”

He added; “The direct impact of lower exports will drag growth down but even more damaging could be the broader shock to confidence and the tightening of financial conditions that result. If negotiations fail to yield concessions and these tariffs remain in place, the eurozone will slip into recession this year.”


There will, however, also be reservations surrounding the UK economic outlook, especially given underlying budget stresses.

JP Morgan commented; “A sustained US tariff rise would lower growth and place significant additional strain on the fiscal outlook.”

It added; “In the absence of a material retaliation and weakening in the currency, weak growth is a disinflationary risk.

The bank expects a May Bank of England rate cut and considers; “Tariffs and the business reaction to the April hike in employers’ tax will help guide how much the BoE can cut.”

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TAGS: Pound Dollar Forecasts Pound Euro Forecasts